Type II diabetes, which is characterized by peripheral insulin resistance and defective insulin secretion, is a disease which affects >5% of the population in developed countries, causing great human suffering and financial losses. Therefore, the identification of naturally existing pathways which can modulate the effectiveness of insulin is a reasonable goal. In this proposal, I seek to clarify the effects the tyrosine phosphatase SHP-2, a potential negative regulator of insulin action, on growth and metabolic signaling by IRS-1, a major substrate of the insulin and insulin-like growth factor-1 (IGF-1) receptor kinases. This study will take place in a mouse model system to allow physiological assessment of the role of SHP-2. Because SHP-2 functions in many pathways besides those initiated by insulin/IGF-1, SHP-2 will be specifically uncoupled from insulin/IGF signals by mutation of the SHP-2 binding sites in IRS-1 using a homologous gene replacement strategy. Based on data from cultured cells, and on the previous characterization of mice completely lacking IRS-1, mice expressing only the SHP-2-uncoupled IRS-1 protein (IRS-1[-SHP2]) are expected to exhibit enhanced peripheral insulin sensitivity, as well as possible in utero or post-natal overgrowth due to hyperactivation of mitogenic pathways downstream of IGFs. A full characterization of the IRS- 1[-SHP2] mice is proposed that will determine the role of SHP-2 in growth, whole-body glucose metabolism, and activation of various intracellular signaling pathways. To determine if the predicted enhanced insulin sensitivity of IRS-1[-SHP2] mice can overcome a genetic disposition toward insulin resistance, IRS- 1[-SHP2] mice will be placed on a high fat diet to induce peripheral insulin resistance, and also mated to mice lacking IRS-2, a model for type II diabetes. An ability of IRS-1[-SHP2] to overcome insulin resistance/diabetes in these models will indicate that SHP-2 may be a reasonable drug target for the treatment of type II diabetes.